The FTSE 100 lacked direction on Tuesday as positive sounds from China helped support mining companies, but a disappointing update from Croda and weakness in Imperial Brands acted as a counterweight.
London’s leading index traded in a remarkably tight range of around 20 points on Tuesday, with little fresh news to fire traders up.
“The FTSE 100 ticked higher on Tuesday, despite modest losses on Wall Street overnight, as markets found a moment of calm after a series of big macro-economic and corporate announcements,” said AJ Bell head of financial analysis Danni Hewson.
“Mining companies did a lot of heavy lifting for the index, as leading commodities consumer China took steps to bolster confidence in its currency and economy ahead of a big leadership summit which kicks off in Beijing in early March.”
Anglo American was the top gainer, with a rise of 2.5%, while Antofagasta added 1.7%. The promise of measures by China to support its economy is starting to wear thin, and the gains in miners failed to spark a substantial FTSE 100 rally.
The benign trading conditions may not last long. Big US economic data points due for release later this week may provide insight into how the Federal Reserve approaches its next interest rate decisions and spur positioning in equity markets.
“Later tonight a reading of US consumer confidence starts the gun on some big releases across the Atlantic. These could offer insight on whether a soft landing can be engineered for the US economy,” said Danni Hewson.
“The latest estimate of fourth quarter GDP follows on Wednesday, and on Thursday the core PCE reading of inflation is published. This metric is closely followed by the Federal Reserve when it comes to making decisions on interest rates.”
Imperial Brands
Threats of a vaping tax hit, reported by the Times, hit Imperial Brands on Tuesday, sending the shares 3.5% lower. Vapes are taxed differently from tobacco products, and reports suggest this could change in next week’s budget.
Imperial Brands has made a big push in vaping products and is much more exposed than peer British American Tobacco, whose shares fell only 0.25%.
“Although the industry is jostling for position in the vaping market, given the volumes declines in tobacco, these products are still a relatively small part of the picture. Investors had also been expecting greater regulation in the sector, so a potential increase in tax isn’t a wild surprise and given they are global companies a change in UK fiscal policy won’t move the dial too much,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.
Croda was the FTSE 100’s biggest casualty after reporting an 18% decline in sales in 2023. Croda was down 5% at the time of writing.
